CONFIDENTIAL
CALDERWOOD & HARKNESS LLP Attorneys at Law
One Liberty Plaza, 38th Floor New York, NY 10006
Telephone: (212) 554-7000 Facsimile: (212) 554-7001 www.calderwoodharkness.com
March 17, 2026
Mr. Daniel Ortega Senior Vice President, Commercial Real Estate Lending Pinnacle Federal Savings Bank 245 Park Avenue, 12th Floor New York, NY 10167
Re: Proposed Acquisition Financing — 450 West 34th Street, New York, NY 10001 Borrower: BFO 450 West 34th LLC (a Delaware limited liability company to be formed) Proposed Loan Amount: Up to $78,000,000 Calderwood & Harkness LLP Matter No. 1026-00003
Dear Mr. Ortega:
I. Introduction and Purpose of Letter
Calderwood & Harkness LLP serves as legal counsel to Briarwood Family Office LLC ("Briarwood" or "BFO"), a Delaware limited liability company headquartered at 680 Park Avenue, 9th Floor, New York, NY 10065, in connection with Briarwood's prospective acquisition of a mixed-use commercial property located at 450 West 34th Street, New York, NY 10001 (the "Property"). Briarwood was founded by, and operates under the direction of, its Founder & Managing Principal, Theodore R. Ashworth, and its Head of Real Estate Investments, Margaux Ashworth-Levine. Briarwood currently manages approximately $2.8 billion in diversified assets across multiple asset classes, including approximately $1.1 billion in New York metropolitan-area commercial and residential real estate. Briarwood has an established track record of acquiring, repositioning, and managing institutional-quality real estate in the New York market, and the proposed acquisition of the Property is consistent with Briarwood's core investment strategy of targeting well-located mixed-use assets with near-term value-add and stabilization potential.
The purpose of this letter is to: (a) introduce the Calderwood & Harkness engagement team assigned to this matter; (b) provide a comprehensive overview of the proposed acquisition transaction, including the Property, the parties, the purchase terms, and the contemplated capital structure; (c) outline the proposed transaction timeline; (d) request that the Bank identify its outside counsel engaged or to be engaged for the proposed financing so that we may begin direct coordination; and (e) propose a framework for coordination on key due diligence, structural, and closing matters relating to the proposed senior acquisition financing of up to $78,000,000, representing approximately 65% of the anticipated $120,000,000 purchase price.
As discussed in greater detail below, the parties executed a Letter of Intent for the acquisition on March 14, 2026, and the transaction is advancing toward execution of a purchase and sale agreement with a target closing date of June 30, 2026. Given the compressed timeline, early and proactive coordination between borrower's counsel and lender's counsel will be essential to achieving a timely closing, and we are eager to begin that process as soon as practicable.
II. Calderwood & Harkness LLP Engagement Team
The following attorneys at Calderwood & Harkness LLP have been assigned to this matter and will serve as Briarwood's counsel in connection with the acquisition and the related financing:
Angela Fontaine — Partner, Real Estate Ms. Fontaine is the Responsible Partner for this engagement and will serve as the primary point of contact for all communications with the Bank and its counsel. Ms. Fontaine has over twenty years of experience representing borrowers, sponsors, and investors in complex commercial real estate acquisition, financing, and disposition transactions throughout the New York metropolitan area. She has extensive experience structuring and negotiating CEMA transactions, preferred equity and mezzanine financing arrangements, and multi-tranche capital stacks.
Telephone: (212) 554-7124
Email: afontaine@calderwoodharkness.com
Douglas Fairchild — Partner, Real Estate Mr. Fairchild is the Billing Partner for this engagement and will be available to consult on matters of transaction strategy and client communication as needed.
Cynthia Ho — Associate, Real Estate Ms. Ho is the Lead Associate on this matter and will be responsible for day-to-day coordination of due diligence, document review, and drafting. Ms. Ho will serve as a secondary point of contact for the Bank and its counsel.
Telephone: (212) 554-7318
Email: cho@calderwoodharkness.com
Grace Nakamura — Associate, Real Estate Ms. Nakamura is the Working Associate on this matter and will assist with title and survey review, organizational document preparation, and closing logistics.
All correspondence and documentation relating to this matter should be directed to Ms. Fontaine and Ms. Ho at the telephone numbers and email addresses set forth above, with hard copies, if applicable, addressed to Calderwood & Harkness LLP, One Liberty Plaza, 38th Floor, New York, NY 10006.
III. Transaction Overview
Set forth below is a summary of the key elements of the proposed acquisition and financing. We provide this overview for the Bank's reference and to facilitate early alignment between the parties and their respective counsel on the material terms and structural considerations.
3.1 The Property
The Property is located at 450 West 34th Street, New York, New York 10001, in the Hudson Yards submarket of Midtown Manhattan. The Property is designated on the Tax Map of the City of New York as Block 754, Lot 42, Borough of Manhattan, County of New York.
The Property consists of a fourteen (14)-story mixed-use building plus cellar, originally constructed in 1928 and substantially renovated between 2016 and 2020, during which time the current owner undertook approximately $14,200,000 in capital improvements. These renovations included modernization of building systems (HVAC, elevator, electrical, and plumbing), a comprehensive facade restoration, lobby and common area upgrades, and a build-out of the residential floors. The Property has a gross building area of approximately 186,400 square feet and is situated on a lot with an area of approximately 20,125 square feet.
The Property is zoned C6-4, which permits as-of-right mixed-use development including commercial, retail, and residential uses. The applicable Floor Area Ratio (FAR) is 10.0, yielding maximum buildable floor area of 201,250 square feet. The Property currently contains approximately 186,400 square feet of gross building area, resulting in approximately 14,850 square feet of unused development rights, which may represent additional value to Briarwood as part of its long-term investment strategy for the asset.
The composition of the building by floor and use type is as follows:
Current occupancy at the Property is approximately 87.4% overall, broken down as follows:
• Retail: 100% occupied
• Office: 81.2% occupied (approximately 18,300 square feet of vacant office space on Floors 8 and 9)
• Residential: 94.7% occupied (36 of 38 units leased)
The stabilization of the currently vacant office space represents a key element of Briarwood's business plan for the Property, and projected lease-up assumptions will be relevant to underwriting discussions with the Bank, as discussed further in Section 3.7 below.
3.2 The Seller
The seller of the Property is Meridian Gateway Holdings LLC, a New York limited liability company (the "Seller"). The Seller's Managing Member is Victor S. Papadopoulos, and its Co-Managing Member is Elena K. Rosenberg. The Seller's principal office is located at 1440 Broadway, Suite 2200, New York, NY 10018.
The Seller acquired the Property on April 14, 2011 for a purchase price of $68,500,000. The Seller has held and operated the Property continuously since that date, during which period it completed the substantial renovation program described in Section 3.1 above.
The Seller is represented by the law firm of Hargrove, Pettigrew & Sloane LLP, with offices at 399 Park Avenue, 18th Floor, New York, NY 10022. The lead partner on the transaction for Seller's counsel is Jonathan D. Hargrove, and the associate is Rebecca Tran. We have established initial contact with Mr. Hargrove's office and anticipate working collaboratively with Seller's counsel on purchase and sale agreement negotiations, due diligence matters, and closing coordination.
3.3 Purchase Terms
The principal terms of the proposed acquisition, as memorialized in the Letter of Intent executed on March 14, 2026, are summarized below:
Purchase Price: $120,000,000, all cash to Seller at closing, subject to customary prorations and adjustments for rents, real estate taxes, utilities, and other operating expenses.
Letter of Intent: Executed March 14, 2026.
Earnest Money Deposit: $6,000,000, representing 5% of the purchase price, to be deposited with Prestige Escrow Services LLC (1 Penn Plaza, Suite 4500, New York, NY 10119) within three (3) business days following execution of the definitive purchase and sale agreement (the "PSA").
Additional Deposit: An additional deposit of $3,000,000 shall be due and payable to the escrow agent upon expiration of the forty-five (45) calendar day due diligence period, bringing total deposits to $9,000,000.
Target PSA Execution: April 11, 2026.
Due Diligence Period: Forty-five (45) calendar days from the date of PSA execution. Assuming PSA execution on April 11, 2026, the due diligence period would expire on or about May 26, 2026.
Target Closing Date: June 30, 2026.
Outside Closing Deadline: July 31, 2026.
Governing Law: State of New York.
We are currently engaged in the preparation and negotiation of the definitive PSA with Seller's counsel, Hargrove, Pettigrew & Sloane LLP. We anticipate that a substantially final draft will be circulated by approximately March 28, 2026, and will endeavor to execute the PSA on or before the April 11, 2026 target date. We will provide the Bank and its counsel with a copy of the fully executed PSA promptly upon execution.
3.4 The Borrower — Acquisition SPV
The proposed borrower under the contemplated senior mortgage loan will be BFO 450 West 34th LLC, a Delaware limited liability company to be formed as a single-purpose entity in connection with this transaction (the "Borrower"). The sole member of the Borrower will be Briarwood Family Office LLC. The Borrower will be organized and structured in compliance with single-purpose entity ("SPE") and separateness covenant requirements customarily imposed by institutional lenders in commercial real estate financing transactions.
The limited liability company agreement of the Borrower will include, among other provisions, standard SPE covenants restricting the Borrower's activities to the ownership, management, and financing of the Property, and will include springing member provisions requiring the unanimous consent of all members, including an independent director or springing member, prior to the filing of any voluntary bankruptcy petition by the Borrower. We understand that the Bank may have specific SPE requirements that will need to be incorporated into the Borrower's organizational documents, and we request that the Bank or its counsel provide us with a copy of those requirements at the earliest practicable date so that they can be incorporated during the entity formation process.
An Employer Identification Number (EIN) will be obtained from the Internal Revenue Service upon formation of the Borrower, and we anticipate completing the formation process promptly following execution of the PSA.
3.5 Property Financial Summary
The following is a summary of the Property's current financial performance, based on information provided by the Seller and subject to verification through Briarwood's ongoing due diligence:
Gross Potential Rent:
Other Income:
Effective Gross Income (EGI): $10,796,000
Total Operating Expenses:
The management fee of $326,240 is calculated at 4.0% of Effective Gross Income pursuant to the existing management agreement with Atlas Urban Management Corp., as further described in Section 5.9 below.
Net Operating Income (Annualized, In-Place): $6,960,000
Implied Capitalization Rate (at $120,000,000 Purchase Price): 5.80%
Price Per square Foot (Gross Building Area): $643.78
The foregoing financial data reflects the Property's in-place performance based on current occupancy of 87.4%. Briarwood's underwriting projects improvement in NOI upon stabilization of the approximately 18,300 square feet of currently vacant office space on Floors 8 and 9, and we anticipate that stabilized NOI projections will be relevant to the Bank's underwriting of the proposed loan.
3.6 Proposed Capital Stack
The proposed sources of capital for the acquisition are as follows:
*Caliber Point Capital Partners LP discussions are preliminary; no term sheet has been issued. The preferred equity carry is anticipated at 10.5% preferred return. See Section 5.7 below for additional discussion.
3.7 Indicative Loan Terms (Per Preliminary Discussions)
Based on preliminary discussions between Briarwood and the Bank, the indicative terms of the proposed senior acquisition mortgage loan are summarized below. We note that no term sheet has been issued by the Bank as of the date hereof, and the following terms remain subject to the Bank's formal underwriting, credit approval, and issuance of a commitment letter.
Proposed Loan Amount: Up to $78,000,000
Loan-to-Value Ratio: Approximately 65% (based on anticipated appraised value of $120,000,000)
Indicative Interest Rate: Secured Overnight Financing Rate ("SOFR") plus 225 basis points. Based on the current 30-day average SOFR of approximately 4.35%, the estimated all-in rate would be approximately 6.60% per annum.
Loan Term: Five (5) years
Amortization: Thirty (30) years
Estimated Annual Debt Service: Approximately $5,986,800, or approximately $498,900 per month (based on fully amortizing payments at the estimated 6.60% interest rate)
Estimated Debt Service Coverage Ratio (In-Place NOI): 1.16× ($6,960,000 ÷ $5,986,800)
We recognize that the estimated DSCR of 1.16× based on in-place NOI is below typical institutional underwriting thresholds, which generally require a minimum DSCR of 1.25× or higher. Briarwood is prepared to discuss strategies with the Bank to address this consideration, including but not limited to:
(a) an initial interest-only period (e.g., 12 to 24 months) during which debt service obligations would be reduced, providing Briarwood with the opportunity to execute its lease-up strategy for the vacant office space;
(b) presentation of detailed lease-up projections for the approximately 18,300 square feet of vacant office space on Floors 8 and 9, supported by current market comparables and broker opinions of rental value, which Briarwood believes will demonstrate achievable stabilized NOI sufficient to exceed minimum DSCR requirements;
(c) adjustments to the capital structure, including a potential increase in the BFO equity contribution or reduction in the requested loan amount; and
(d) the establishment of a cash management or reserve structure that provides the Bank with enhanced protections during the lease-up period.
We look forward to engaging in a productive dialogue with the Bank regarding these matters once the formal underwriting process commences and a term sheet is issued.
IV. Request for Lender's Counsel Information
We respectfully request that Pinnacle Federal Savings Bank identify the outside counsel that the Bank has engaged, or intends to engage, in connection with the proposed loan. Specifically, we request that the Bank provide the following information for the lead attorney at lender's counsel at the earliest opportunity:
(a) Name of law firm;
(b) Name and title of lead attorney;
(c) Office address;
(d) Direct telephone number; and
(e) Email address.
Upon receipt of this information, we intend to initiate direct contact with lender's counsel to begin coordination on the loan documentation, title and survey review, SPE and organizational document requirements, insurance specifications, environmental due diligence, CEMA transaction structure, and closing logistics. In our experience, early establishment of a working relationship between borrower's counsel and lender's counsel is instrumental in identifying and resolving potential issues well in advance of the closing date, particularly in transactions with compressed timelines such as the one contemplated here.
We also wish to express our willingness to share relevant buyer's-side due diligence materials with lender's counsel as they become available, including title reports, surveys, environmental assessments, appraisals, lease abstractions, zoning analyses, and historical operating statements. We believe that the proactive sharing of such materials will help to avoid duplication of effort, reduce costs for all parties, and accelerate the overall diligence and closing process.
V. Key Coordination Items
Set forth below are a number of key diligence, structural, and closing items on which we anticipate the need for early and ongoing coordination between borrower's counsel and lender's counsel. For each item, we provide a brief summary of the current status and, where applicable, identify specific information or direction that we are requesting from the Bank or its counsel.
5.1 Title and Survey
Calderwood & Harkness LLP is in the process of obtaining a preliminary title report for the Property from Granite State Title Insurance Company (title officer: Martin Clearfield), with offices at 140 Broadway, 22nd Floor, New York, NY 10005. We expect to receive the preliminary title report within the next two to three weeks and will promptly share it with the Bank and its counsel upon receipt.
For reference, the Seller's existing owner's title insurance policy is Policy No. GST-2011-04872, issued by Granite State Title Insurance Company, dated April 14, 2011, with an insured amount of $68,500,000. We are currently in the process of obtaining a copy of the existing policy and all recorded exception documents referenced therein.
Based on our preliminary review and information obtained from the Seller, the following encumbrances are currently of record against the Property:
(a) An existing mortgage in favor of Eastbridge Commercial Bank, N.A. (original principal amount of $41,100,000), recorded on April 14, 2011. The estimated current payoff balance is approximately $28,700,000. This mortgage is expected to be either satisfied at or prior to closing, or assigned in connection with a CEMA transaction as discussed in Section 5.2 below.
(b) A UCC-1 financing statement filed in favor of Eastbridge Commercial Bank, N.A. in connection with the existing mortgage loan, covering fixtures and other collateral. This financing statement will need to be terminated or assigned in connection with the closing.
(c) A Ashford Partners LLC easement for vault space, as recorded in Liber 4823, Page 112 of the Office of the City Register, New York County. This easement relates to utility infrastructure below the sidewalk and is a standard encumbrance for properties of this type in Manhattan. We do not anticipate that this easement will present a material title issue, but will confirm upon review of the full instrument.
(d) Standard New York City zoning lot restrictions applicable to the Property and surrounding lots, as recorded against the Property in connection with applicable zoning lot development agreements and declarations, if any.
Briarwood intends to obtain an updated owner's title insurance policy insured in the amount of $120,000,000 in connection with the acquisition. The Bank will, of course, require a lender's title insurance policy in the amount of the loan. We request that the Bank or its counsel provide us with a list of all title endorsements required by the Bank for the lender's policy (including, without limitation, any survey, zoning, environmental lien, usury, comprehensive, access, tax parcel, and variable rate endorsements), so that we may coordinate with Granite State Title Insurance Company to ensure that all such endorsements can be obtained and that the costs are included in our closing cost projections.
With respect to the survey, the most recent ALTA survey of the Property on file was prepared by Clearview Land Surveyors Inc., dated March 2, 2011. This survey is now over fifteen years old and does not reflect the renovations undertaken between 2016 and 2020 or any changes to site conditions. Briarwood intends to commission an updated ALTA/NSPS Land Title Survey incorporating applicable Table A optional survey responsibilities and items. We request that the Bank or its counsel provide us with a list of the specific Table A items required by the Bank, so that these can be included in the scope of the surveyor's engagement from the outset, thereby avoiding the need for a subsequent survey revision and the associated cost and delay.
5.2 CEMA Structure — Mortgage Recording Tax Savings
A significant coordination item on which we wish to focus the Bank's early attention is the potential use of a Consolidation, Extension, and Modification Agreement ("CEMA") transaction structure to reduce the New York State and New York City mortgage recording tax ("MRT") payable in connection with the proposed loan.
As noted above, there is an existing mortgage against the Property in favor of Eastbridge Commercial Bank, N.A., with an original principal amount of $41,100,000, recorded on April 14, 2011, per ACRIS records for Block 754, Lot 42, Borough of Manhattan. The estimated current payoff balance of the existing Eastbridge mortgage is approximately $28,700,000.
Under a conventional financing structure in which the existing mortgage is satisfied and discharged at closing and a new mortgage is recorded in favor of the Bank, the MRT payable on the new $78,000,000 mortgage would be calculated as follows:
Full MRT on New Mortgage: $78,000,000 × 2.80% = $2,184,000
Under a CEMA structure, the existing Eastbridge mortgage would be assigned (rather than satisfied) to the Bank or its designee at closing, and the assigned mortgage would then be consolidated with a new gap mortgage from the Borrower in favor of the Bank and modified to reflect the terms of the new loan. Under this structure, MRT would be payable only on the "new money" — i.e., the excess of the new loan amount over the unpaid principal balance of the existing assigned mortgage — resulting in the following calculation:
MRT on New Money Under CEMA: ($78,000,000 − $28,700,000) = $49,300,000 × 2.80% = $1,380,400
Estimated CEMA Savings: $2,184,000 − $1,380,400 = $803,600
The estimated MRT savings of approximately $803,600 represents a substantial benefit to the transaction. We respectfully request the Bank's confirmation that it is willing to participate in a CEMA structure and to accept an assignment of the existing Eastbridge mortgage in connection with the proposed loan. We note that Briarwood has routinely utilized CEMA structures in prior New York acquisitions and that the Calderwood & Harkness real estate team has extensive experience structuring and documenting such transactions.
We are in the process of preparing a draft CEMA request letter to Eastbridge Commercial Bank, N.A. to solicit Eastbridge's cooperation in assigning the existing mortgage at closing. We anticipate submitting this request to Eastbridge promptly, as Eastbridge's willingness to participate and the applicable assignment fee and processing timeline will be key variables affecting the viability and timing of the CEMA structure.
Coordination with lender's counsel will be essential to ensure that the CEMA documentation — including the assignment of mortgage, the gap mortgage, the consolidation, extension, and modification agreement, and the consolidated mortgage note — is properly structured, that title continuity is maintained through the recording sequence, and that the lender's title policy provides the Bank with the same protections that would be afforded under a conventional new mortgage structure. We look forward to discussing these matters with lender's counsel in detail once engaged.
5.3 Environmental Due Diligence
The most recent Phase I Environmental Site Assessment ("Phase I ESA") for the Property was prepared by Whitmore Environmental Sciences LLC (project manager: Dr. Samantha Reeves) and is dated June 15, 2020. The Phase I ESA identified no recognized environmental conditions ("RECs") at the Property. A de minimis concern was flagged regarding potential historical dry-cleaning operations at an adjacent lot; however, based on available records and site observations, no further investigation was recommended by the environmental consultant at the time of the assessment.
Because the existing Phase I ESA is now more than 180 days old and therefore does not satisfy the shelf life requirements of the ASTM E1527-21 standard for purposes of establishing the innocent landowner defense and related protections under the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA"), Briarwood is commissioning an updated Phase I ESA from Whitmore Environmental Sciences LLC in compliance with the current ASTM E1527-21 standard. We anticipate that the updated Phase I ESA will be completed within approximately four to six weeks of engagement.
We request that the Bank or its counsel advise us of the following:
(a) The Bank's environmental due diligence requirements for the proposed loan, including whether the Bank will require a Phase II Environmental Site Assessment or any other supplemental environmental investigation;
(b) Whether the Bank will accept a reliance letter from Whitmore Environmental Sciences LLC permitting the Bank to rely upon the updated Phase I ESA, and if so, any specific reliance letter language or provisions required by the Bank; and
(c) Any additional environmental compliance documentation required by the Bank, including without limitation asbestos surveys, lead paint assessments, radon testing, or mold assessments.
5.4 Appraisal
Briarwood has engaged Kensington Valuation Group Inc. (lead appraiser: Robert Huang, MAI) to prepare an independent appraisal of the Property in connection with the acquisition. Kensington Valuation Group's offices are located at 757 Third Avenue, 14th Floor, New York, NY 10017. We anticipate that the appraisal will be completed within approximately four to five weeks of engagement and will include an "as-is" valuation as well as a stabilized value analysis reflecting the lease-up of the currently vacant office space.
We understand that the Bank will likely require an appraisal prepared in accordance with the Uniform Standards of Professional Appraisal Practice ("USPAP") and in compliance with applicable federal financial institution regulatory requirements, including the requirements of Title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA"). We request that the Bank advise us whether:
(a) The Bank will accept the engagement of Kensington Valuation Group Inc. as the appraiser for the proposed loan, provided that a reliance letter is issued in favor of the Bank permitting the Bank to rely upon the appraisal for underwriting and regulatory compliance purposes; or
(b) The Bank will require the engagement of its own independent appraiser, in which case we would request the identity of the Bank's preferred appraiser so that Briarwood can coordinate Property access and information sharing.
5.5 Insurance Requirements
Briarwood's insurance broker for this transaction is Lockhart & Pryor Insurance Advisors LLC (broker: Nadia Kowalski), with offices at 100 William Street, Suite 600, New York, NY 10038. Ms. Kowalski is experienced in structuring insurance programs for New York commercial real estate assets and is prepared to work directly with the Bank and its counsel to ensure compliance with all lender insurance requirements.
The Property's current annual insurance cost is approximately $312,000. We anticipate that the existing insurance program will need to be reviewed and potentially modified to conform to the Bank's requirements in connection with the proposed loan.
We request that the Bank or its counsel provide us with the Bank's complete insurance requirements at the earliest opportunity, including without limitation:
(a) Required coverage types (e.g., property/casualty, general liability, umbrella/excess, business interruption/rental loss, terrorism (TRIA), boiler and machinery/equipment breakdown);
(b) Minimum coverage limits for each required coverage type;
(c) Loss payee and additional insured designation language for the Bank;
(d) Flood insurance certification requirements, including whether a Standard Flood Hazard Determination Form (SFHDF) has been obtained and whether flood insurance is required based on the Property's flood zone designation;
(e) Requirements with respect to wind/named storm coverage, if applicable;
(f) Requirements regarding deductible maximums; and
(g) Any specific policy form, endorsement, or carrier rating requirements (e.g., minimum A.M. Best rating).
Upon receipt of the Bank's insurance requirements, Ms. Kowalski will prepare insurance specifications and obtain quotes from the Borrower's insurers to ensure compliance prior to closing.
5.6 SPE / Borrower Structure Requirements
As described in Section 3.4 above, the Borrower, BFO 450 West 34th LLC, will be formed as a single-purpose entity and its limited liability company agreement will include standard separateness covenants and springing member or independent director provisions. We are prepared to begin drafting the Borrower's organizational documents promptly.
To ensure that the organizational documents are prepared in a manner that satisfies the Bank's requirements from the outset and avoids the need for subsequent revision, we request that the Bank or its counsel provide us with:
(a) The Bank's standard SPE covenant requirements, including any specific provisions required to be included in the Borrower's limited liability company agreement;
(b) The Bank's requirements regarding springing members or independent directors, including any requirements as to the identity or qualifications of such persons and the circumstances under which their consent is required;
(c) Any nonconsolidation opinion requirements, including the identity of the law firm from which the Bank will require such an opinion to be delivered and the specific factual assumptions and legal conclusions that the opinion must address; and
(d) Any requirements regarding guarantor entities or individuals, including whether the Bank will require a carve-out guaranty or environmental indemnity from Briarwood Family Office LLC or Theodore R. Ashworth personally.
5.7 Preferred Equity / Intercreditor
As set forth in Section 3.6 above, Briarwood is in preliminary discussions with Caliber Point Capital Partners LP (managing director: Priya Sundaram), with offices at 590 Madison Avenue, Suite 3100, New York, NY 10022, regarding a potential preferred equity investment of up to $18,000,000 in the Borrower or a holding company entity above the Borrower. The preferred equity investment, if consummated, would carry a 10.5% preferred return. No term sheet has been issued by Caliber Point as of the date hereof, and the preferred equity structure remains subject to further negotiation and documentation.
We recognize that the Bank may have requirements and concerns relating to the existence of preferred equity subordinate to the senior mortgage, and we request the Bank's guidance on the following:
(a) The Bank's general position on the acceptability of preferred equity in the capital structure subordinate to the Bank's senior mortgage;
(b) Whether the Bank will require an intercreditor agreement, recognition agreement, or subordination agreement between the Bank and the preferred equity provider, and if so, whether the Bank has a standard form of such agreement that can be shared with us;
(c) Any structural requirements imposed by the Bank with respect to the preferred equity, including without limitation requirements that the preferred equity be held at a level above the Borrower (i.e., at the membership interest level rather than at the Borrower entity level), restrictions on the preferred equity provider's remedies, or limitations on the preferred return rate or other economic terms; and
(d) Any notification, consent, or approval requirements that the Bank will impose with respect to the issuance or modification of preferred equity during the term of the loan.
We will keep the Bank and its counsel informed as discussions with Caliber Point Capital Partners LP progress and will coordinate closely with lender's counsel on any intercreditor or recognition agreement terms if the preferred equity transaction proceeds.
5.8 Existing Tenancies and Estoppels
The Property is currently occupied by a mix of commercial and residential tenants. The major commercial tenants, by area, are as follows:
In addition, the Property contains 38 residential rental units located on Floors 10 through 14, of which 36 are currently occupied pursuant to standard residential lease agreements.
In connection with the acquisition, Briarwood will obtain tenant estoppel certificates from all major commercial tenants, and we anticipate that the PSA will require estoppel certificates as a condition to closing. We request the Bank's guidance on the following:
(a) Whether the Bank has a standard form of tenant estoppel certificate that it requires the Borrower to use, or whether the Bank will accept estoppels obtained using the buyer's form (which we will prepare in connection with the PSA negotiations);
(b) The Bank's minimum estoppel coverage requirements (e.g., estoppels from tenants representing a specified percentage of occupied square footage or a specified percentage of rental income);
(c) Whether the Bank will require subordination, non-disturbance, and attornment agreements ("SNDAs") to be delivered by some or all of the commercial tenants, and if so, whether the Bank has a standard form of SNDA that can be provided to us for distribution to tenants; and
(d) Any requirements with respect to lease review or approval by the Bank or its counsel, including whether the Bank will require copies of all existing leases, amendments, and rent rolls prior to issuance of a loan commitment.
5.9 Property Management
The Property is currently managed by Atlas Urban Management Corp. (senior property manager: Gerald Fitch), with offices at 330 West 42nd Street, 7th Floor, New York, NY 10036. The existing management agreement has a term running through December 31, 2027, and provides for a management fee equal to 4.0% of the Property's effective gross income.
Briarwood intends to retain Atlas Urban Management Corp. as the property manager for the Property following the acquisition, subject to the Bank's approval and any requirements imposed by the Bank with respect to the management arrangement. We request that the Bank or its counsel advise us of the following:
(a) Whether the Bank will require an assignment and subordination of the management agreement in favor of the Bank;
(b) Whether the Bank will require a collateral assignment of the management agreement as additional loan collateral;
(c) Whether the Bank has any objections to the existing management fee structure (4.0% of EGI) or the term of the management agreement (through December 31, 2027);
(d) Whether the Bank will require the right to approve or replace the property manager upon the occurrence of an event of default under the loan documents; and
(e) Any other requirements relating to the property management arrangement.
VI. Proposed Timeline Summary
The following table summarizes the key milestones and target dates for the proposed transaction. We note that certain dates, particularly those relating to the Bank's underwriting, term sheet, and loan commitment, remain to be determined and are subject to the Bank's internal processes and approvals.
We wish to emphasize that the transaction timeline is compressed, with approximately three and a half months between the anticipated PSA execution date and the target closing date. Within that period, all due diligence, underwriting, loan documentation, title clearance, survey certification, environmental assessment, CEMA coordination with Eastbridge, and closing preparation must be completed. In our experience, transactions of this complexity typically require four to five months to close from PSA execution, making early coordination with the Bank's counsel and the proactive identification and resolution of potential issues absolutely critical to achieving the June 30, 2026 closing target. We are committed to devoting the resources necessary to meet this timeline and request the Bank's cooperation and engagement to the same end.
VII. Document Sharing and Data Room
We anticipate that a substantial volume of documentation and diligence materials will need to be reviewed and shared among the parties and their respective counsel in connection with both the acquisition and the financing. To facilitate an efficient and organized diligence process, we offer to provide the Bank and its counsel with access to the buyer's due diligence data room, which is being hosted and maintained by Seller's counsel, Hargrove, Pettigrew & Sloane LLP, once access protocols and any applicable confidentiality requirements have been confirmed with Seller's counsel. We anticipate that access can be arranged promptly upon execution of appropriate nondisclosure agreements, if required by the Seller.
In addition, we offer to share copies of the following materials with the Bank and its counsel as they become available:
• Preliminary title report and all recorded exception documents
• Updated ALTA/NSPS survey
• Updated Phase I Environmental Site Assessment
• Independent appraisal
• Lease abstractions and rent roll
• Zoning analysis and zoning lot documentation
• Historical operating statements and financial projections
• Organizational documents for the Borrower and related entities
• Purchase and sale agreement (upon execution)
• CEMA-related correspondence and documentation
We also wish to identify the following additional members of Briarwood's advisory team who are available to coordinate with the Bank and its counsel on specific aspects of the diligence and closing process:
Buyer's Accountant / Tax Advisor: Edgemont Nash & Co. LLP Engagement Partner: Laura Siddiqui, CPA 1185 Avenue of the Americas, 20th Floor New York, NY 10036 Ms. Siddiqui is available to coordinate with the Bank and its counsel on financial diligence matters, including review of historical operating statements, tax returns, and pro forma financial projections.
Buyer's Zoning Consultant: Halcyon Planning Associates LLC Principal: Mark Espinoza, AICP 250 West 57th Street, Suite 1430 New York, NY 10107 Mr. Espinoza is available to coordinate with the Bank and its counsel on zoning-related inquiries, including confirmation of the Property's zoning designation, permitted uses, bulk and density compliance, and the status of any applicable special permits, variances, or restrictive declarations.
We will coordinate the timing and manner of information sharing with the Bank and its counsel to ensure that all parties have the materials they need to conduct their respective diligence and document preparation on a timely basis.
VIII. Closing Remarks
We very much appreciate Pinnacle Federal Savings Bank's consideration of the proposed acquisition financing for the Property, and we look forward to working closely with the Bank and its counsel throughout the underwriting, documentation, and closing process. Briarwood has a long history of productive relationships with its lending partners, and we are confident that the same will be true of this engagement.
We are prepared and available to discuss the foregoing items and any additional matters at Mr. Ortega's earliest convenience, whether by telephone conference, videoconference, or in-person meeting. Please do not hesitate to contact the undersigned or Ms. Cynthia Ho to schedule a call or meeting at a mutually convenient time.
Angela Fontaine, Partner Telephone: (212) 554-7124
Email: afontaine@calderwoodharkness.com
Cynthia Ho, Associate Telephone: (212) 554-7318
Email: cho@calderwoodharkness.com
We look forward to hearing from you and to commencing the coordination process with lender's counsel as soon as possible.
Very truly yours,